At an entrepreneurial meetup I hosted recently, I asked everyone to think of a high-end offer for their audience. Most of the women in the room had never offered anything at a premium price, but I was shocked when someone started telling the group about her experience doing so. “I run a successful, high-end seven-figure company, and have for over a decade, but every time I finish the year, I’m disappointed with profit margins hardly over 30%,” one entrepreneur told us.
She went on to explain that she charged a lot, but would also sometimes tell her clients that they didn’t need to pay for that month’s work or she would offer to do certain expensive tasks for free. Woah. High-end, but still scraping by? Not okay. But she’s not the only one. According to this study, self-employed men earn 28% more than self-employed women. Why is this? In my experience, it’s usually because women don’t charge enough for their services or they try to be too generous, which then leaves them with measly profit margins.
By and large, the #1 problem female entrepreneurs have is asking for an amount that not only covers costs but also leaves them with a healthy 70% profit margin. Here are three things you can do to reverse this and make more money in business.
1. Fire some clients.
If you have a client who doesn’t want to pay what you’re worth, don’t hold on to them. Lovingly let them go. This will create space for more clients to come in that will gladly pay whatever rate you charge. And the secret truth is that the highest-paying clients are the easiest to work with, but you can’t serve them if you’re too busy with clients who don’t value you or your work. Trust that there’s more where that came from, set your boundaries, let difficult clients go, and focus on attracting higher-end clients that love you.
2. Overcompensate for costs.
If you think you need to charge $5,000 to cover costs and turn a profit, my advice is to double that. When you price an offering, putting in a buffer amount allows wiggle room for you to cover any extra time or expenses spent on a project. It’ll also ensure that if you need to hire help or invest in new material you won’t go in the red. This is especially important for product-based or project-based businesses that go off of cost estimates. Overestimate costs so that you can a) make more money and b) overdeliver on your service.
3. Charge a premium price.
To me, premium means anything above $1,000 a month. If you’re charging a premium, you can take on fewer clients, do better work with them, but not suffer the loss of profit. You can have multiple tiers of offers to serve your client base, but having at least one premium offer is such a game-changer when it comes to scaling your business. Raise your rates and watch the magic happen as you work less and earn more.
I don’t know about you, but I’m done seeing women settling for “enough.” Setting the bar high for yourself and your business means you aren’t just a newbie in your field, you’re an expert. What naturally follows is increased profits and better clients.
About the author: Kimberly Lucht is a business coach who helps women make their first six figures doing what they love. She’s been featured in Money, Business Insider, Well + Good, Greatist, Create & Cultivate, and more.